Chief Strategy Officer, Issue 18

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A company’s ability to strategize is really tested in times of adversity. Volkswagen’s fall from grace is a case in point. Not only has the emissions scandal negatively affected its profits, but the brand’s image has been, in all likelihood, permanently damaged.

It demonstrates how vulnerable even the world’s most established brands can be. Another company that’s taken a big strategic risk recently is Amazon. Jeff Bezos has risked upsetting Google and Apple, announcing that the company has stopped selling their media streaming products. It’s a bold move. Amazon is clearly trying to promote its Prime service, but some feel that the company has forgotten about its customers.

While some companies are in a period of uncertainty, certain brands - like Beats - can seemingly do no wrong. Dr. Dre’s headphone company was recently sold to Apple, but not before an extensive marketing campaign, which has become something of a blueprint for emerging companies.

Although marketing is clearly an essential tool for driving profits and organizational growth, it’s never the sole reason for success. Google, Amazon and the Virgin Group are prime examples of diversified companies, which have made bold leaps into new ventures.

In the early 1980s, Richard Branson was seen as a music mogul. Having signed the Rolling Stones and Janet Jackson, all the signs pointed to him continuing in the industry. The shock announcement that he was going to start an airline bemused his company’s directors, but ultimately proved a lasting success.

With this in mind, you would think that diversification is a sure fire route to success. Yet time after time we see companies fail after they diversify, with Snapchat the most recent example. It just goes to show the importance of intuition when it comes to business strategy.

As always, if you have any comment on the magazine or if you want to submit an article, please contact me at sbarton@theiegroup.com